* Greenlight manager close to deal with Fred Wilpon
* Einhorn stake could help cash-strapped Mets
* Mets owners challenge Madoff trustee lawsuit (Updates with Einhorn conference call, Madoff trustee litigation and Mets court filing)
By Jennifer Ablan and Jonathan Stempel
NEW YORK, May 26 (Reuters) - Hedge fund manager David Einhorn is set to acquire a minority stake in the New York Mets, in a $200 million deal that could put him in a position to take control of the cash-strapped baseball team.
The president of Greenlight Capital is in exclusive talks with Mets ownership, led by real estate developer Fred Wilpon, both sides confirmed on Thursday.
Both sides said they hope to cement a final agreement by the end of June. Neither would disclose possible terms. Any investment would have to be approved by Major League Baseball.
For Einhorn, whose flagship fund fell 3.4 percent in the first quarter, the investment in the Mets appears to be a comparatively low-risk proposition -- provided that it contains protections from any settlement the Mets' owners may face relating to Bernard Madoff's Ponzi scheme.
"I have no real plans to sell this investment," Einhorn said on a conference call with reporters on Thursday. "I expect to hold it for a very, very long time."
It is unclear how Einhorn would finance any investment, or whether he might want an outside partner to assist. It is also unclear whether other outside investors might step in and make superior offers to Mets management.
The principals of Mets owners Sterling Equities, including Wilpon and Saul Katz, sought an outside investor for a noncontrolling stake in the team after Irving Picard, the court-appointed trustee seeking money for Madoff's victims, sued them for $1 billion.
Picard has said the owners were longtime Madoff investors who were "net winners" from the fraud, and ignored red flags that should have alerted them to Madoff's illegal activities.
Even though he would not have a controlling stake in the baseball club, the hedge fund trader would appear to be in a prime position to take a leadership role with the Mets if the Wilpons were ultimately forced to sell their interest because of their involvement in the Madoff litigation.
If a deal with Einhorn were completed, the 42-year-old investor and competitive poker player would follow Philip Falcone, John Henry and James Pallotta among well-known hedge fund managers to invest in professional sports teams.
Despite having one of the biggest payrolls in baseball, the Mets remain in the shadow of the New York Yankees.
The Mets have had two straight losing seasons and have seen attendance drop off sharply despite playing in a ballpark, Citi Field, that opened only two years ago. The team has not won a World Series since 1986, and its 23-25 record this year places it fourth in the five-team National League East.
Einhorn, a lifelong baseball fan and long-time Mets fan, is committing his own money to the deal. For a factbox on Einhorn please click on [ID:N26287724]
In recent years his Greenlight Capital, with $7.8 billion under management, has emerged as one of the more influential hedge fund firms in the world.
Einhorn made his name by warning about Lehman Brothers Holdings Inc's LEHMQ.PK financial health before the investment bank's bankruptcy, and from a long-running battle with the management of Allied Capital Corp (AFC.N).
Owners of the Mets have searched for a minority investor for several months. Other hedge fund managers had emerged as potential buyers. For a time it appeared the Wilpons were close to a deal with SAC Capital Advisors' founder Steven Cohen.
"We called over to their investment bankers and got right involved," Einhorn said. "It has been a very smooth process throughout the last several months, and we're very far along in understanding the business operations and prospects."
Some of those prospects depends on Picard's success in his "clawback" lawsuit, which seeks to recover "fictitious profits" that the Wilpon family and its business partners are said to have made with Madoff, as well as investment principal.
The Mets also own a majority of SportsNet New York, better known as SNY, which broadcasts their games. Time Warner Cable Inc TWC.N and Comcast Corp (CMCSA.O) also own stakes in SNY.
Einhorn, a Mets fan since he was a young boy, maintained that his interest is in the team. "I'm not really interested in owning a TV station," he said.
It is unclear how much protection Einhorn would demand from the Mets owners for his investment. This could include whether he would be insulated from any settlement arranged by Picard, or further losses incurred by the team.
Picard did not immediately return a request for comment. Madoff, 73, pleaded guilty in 2009 and is serving a 150-year prison sentence.
Separately, Wilpon and Katz have filed papers seeking to move Picard's lawsuit against them to federal district court from bankruptcy court, saying it involves major questions of non-bankruptcy law.
Moving the case would allow the case to be tried before a jury, should it get that far. Two federal district judges have said Picard's clawback lawsuits against JPMorgan Chase & Co (JPM.N) and HSBC Holdings Plc (HSBA.L) raise non-bankruptcy issues.
Einhorn had given a subtle hint about his interest in the Mets at a hedge fund conference on Wednesday. He shouted out "Let's Go Mets!" at the end of his presentation at the Ira Sohn Investment Conference in Manhattan.
The manager did not offer explanation for his cheer. During the conference he called on Microsoft Corp's (MSFT.O) board to oust the software company's chief executive, Steven Ballmer. [ID:nN25183623]
News of Einhorn's negotiations with Wilpon was first reported by ESPN. (Additional reporting by Matthew Goldstein and Julian Linden, editing by Dave Zimmerman and Gerald E. McCormick)